Life changes. The life insurance policy you bought years ago may still serve an important purpose, but when did you last check how it fits your life today?
If you already own life insurance and are wondering whether it still fits, start here. These five questions will help you understand your coverage, organize your records, and decide what to ask your insurer or financial professional. A review does not necessarily mean buying a new policy.
1. What would you want the coverage to help pay for?
Think about the financial responsibilities that would remain if you died: household expenses, a mortgage, other debts, education costs, or support for someone who depends on you. Then consider the savings, existing coverage, and other resources available to help meet those needs. Your answer should reflect your household rather than a rule of thumb.
2. What has changed since you bought the policy?
A marriage, divorce, new child, job change, or approaching retirement can be a reason to revisit coverage. Make a short list of what has changed and what you still want the policy to accomplish. A review may show that your current coverage remains appropriate.
A simple example: Imagine you bought coverage when your children were young and your mortgage was new. Years later, your children may be independent, while a spouse or another family member may still rely on your income. Write down the responsibilities that remain before deciding whether your coverage should change.
3. How long do you need the protection?
Term life insurance covers a specified period. Check when your term ends, what renewal would cost, and whether the contract offers a conversion option with a deadline. Permanent coverage is designed for longer-term needs, but keeping it in force depends on meeting the policy's requirements. Ask how premiums, expenses, and policy values affect its outlook.
4. Are your beneficiaries and records current?
Review your primary and contingent beneficiary designations with the insurer, especially after a major family change. If your plans involve a minor, a trust, or a dependent with special needs, discuss the arrangement with qualified legal counsel before changing designations. Make sure a trusted person knows where to find your policy and whom to contact.
5. What should you understand before changing anything?
Bring your policy, latest statement, premium information, and beneficiary records to the review. For cash value coverage, request an updated illustration and ask which figures are guaranteed and which are projections. Compare the costs and benefits of keeping, adjusting, or replacing coverage. New coverage may depend on your health and could cost more. Do not cancel existing coverage before replacement coverage is issued, accepted, and in force.
Your next step: make a one-page policy checklist
You can start on your own. Gather your records and write down:
- The insurer, policy type, and current death benefit.
- The premium you pay and any dates when it may change.
- Any term expiration, renewal, or conversion deadlines.
- Your primary and contingent beneficiaries.
- What you want the coverage to accomplish today, plus anything you do not understand.
Keep that checklist with your policy documents. It gives you a useful starting point for asking questions, whether you decide to keep your coverage as it is or explore a change.
Want help working through the questions?
If you would like help understanding how your existing coverage fits your financial plan, you can schedule a Life Insurance Coverage Review with Kevin Webb. Bring your checklist and current policy statement so the conversation can focus on your questions.
Schedule Your Life Insurance Coverage Review
This material is for educational purposes. Coverage, costs, options, and guarantees depend on the policy and insurer. Consult appropriate insurance, tax, and legal professionals about your circumstances.
Further reading: NAIC Life Insurance Buyer's Guide and New York Department of Financial Services: Life Insurance Information for Consumers.